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Special Report With Bret Baier

News/Business. Bret Baier. (2011)

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Boehner 22, U.s. 10, Walter Reed 8, Washington 6, Harry Reid 6, Libya 5, Somalia 5, Iowa 5, Nato 5, Nina 3, Jennifer Griffin 3, S&p 3, Us 3, Britain 2, Bret 2, Obama 2, America 2, China 2, Greece 2, James Rosen 2,
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  FOX News    Special Report With Bret Baier    News/Business.  
   Bret Baier.  (2011)  

    July 28, 2011
    1:00 - 2:00am PDT  

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>> back to you, greg. >> back to my new favorite baker, jack baker. maybe not. kind of ran out at that point. t ceiling is reached, still no sign of a deal, but movement in the house. we'll have team coverage. one of the candidates who wants to replace president obama is focusing on the general election. plus, remember libya? the u.s. and nato are still there. an update and price tag live from our studio in washington, this is "special report." good evening. i'm red, white and blue. insid.i'm bret baier. the stalemate shows no signs of ending. two major plans remain under consideration, but neither has much bipartisan support. tonight, though, one has more republican support it did 24 hours ago. we have team fox coverage.
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ed henry reports on the increasingly dire tone coming from the house, but we begin with chief congressional correspondent mike emanuel on capitol hill gridlock. good evening, mike. >> good evening. they're trying to round up votes from house republican freshmen. earlier in the in the day, the speaker i'd get your ass in line" and back his plan. time was running short as the day was lost in the process. speaker boehner saved his talking for behind closed doors as house republicans are arm-twisting to get the 217 votes for his plan to pass the house. the speaker pulled it back, fine-tuned it, and pushed for the bill to hit floor thursday. >> when push comes to shove, i'm confident that this bill is going to pass the house of representatives. >> part of that confidence comes
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from signs the tide is shifting in favor of the boehner plan from fiscal hawks. >> i'm shifted, you don't let the perfect get in the way of the doable. >> there was this show of support for the boehner package. >> the fact is, rebs have offered the only proposal at this point that attempts to get at the root of the problem. and which actually has a chance of getting to the president's desk. that's why we'll continue to press for the legislation speaker boehner has proposed. >> after predicting no senate democrats will ultimately vote for the boehner bill, senator chuck schumer offered this assessment. >> the speaker's plan is on life support, and it's time for him to pull the plug. we need to move on to other plans that actually have a chance of passing. >> meanwhile senate majority leader leader harry reid's plan came up short with the budget analyst, but reid said he'd trim his plan by that amount, but if
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the speaker's plan passes the house and is sent to the senate, he says he's prepared. >> don't worry, it will be altered. >> an aide sent an email to conservative activists trying to get them to help kill the boehner plan. intraparty warfare, trying to manufacture pressure on republicans. bret? >> the congressional budget office just released new details. according to the speaker's office, they just put on their website, new analysis from the cbo on this to plan saying the spending cuts are greater than the debt hike now, cut and cap spending by $917 billion over 10 years, more than the $900 billion debt hike, cutting $22 billion in the spending year fy-2012. there are more details here. we will get with them and check all of that out with the panel in just a bit. if there was ever any optimism
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about a smooth ending to the debt limit debate it seems to have evaporated. chief white house correspondent ed henry is here with the latest administration warnings. good evening, ed. >> good evening, bret. wall street analysts keep saying the government has more cash than expected and can make it past the august 2nd deadline and keep going, but actually the treasury department today said that tax receipts in june and july were normal, so next tuesday the government hits the wall. white house spokesman jay carney are scoffed at suggestions the august 2nd deadline is artificial and warned the country to brace too the worse. >> that deadline is hard and fast. there are no offramps. they don't exist. >> some republicans are still not buying the administration's claims, suggesting both parties are on a collision course. >> i think the president really wants a crisis, so i think he's going to let this thing go right to the brink. >> that skepticism led carney to suggest a bigger market meltdown may be coming. >> if they're so convinced that
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this is all made up, you know, buy in whole, see what happens. tell your members of congress, don't worry about it. i mean, honestly. it's just a false argument. >> top democrats are demanding the president lift the debt ceiling on his own, relying on the 14th amendment to the constitution which says the validity of the public debt shall not be questioned. >> he should sign an executive order invoking the 14th amendment to this issue. >> but the president says that's off the table, and congress should instead work out a legislative compromise. today mr. obama got an assist on that from a strange ally, republican senator john mccain. with the tea party rallying outside the capitol, mccain read from a "wall street journal" editorial warning if conservatives don't give ground, it will be backfire on republicans politically.
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>> the tea party hobbits could return to middle earth, having defeated mordor. the reality is that the debt limit will be raised one way or other, and the only issue is with how much fiscal reform and what political fallout. >> now, a top official told me the president spent a good chunk of the afternoon burning up the phone lines to capitol hill. spoke to a number of lawmakers, but still no breakthrough. bret? >> ed henry, live on the north lawn. ed, thank you. wall street is showing its displeasure with the debt struggles. take a look at this. the dow dropped 199 today. the s&p gained back 27. the nasdaq finished 75 behind. fox business network correspondent richard edison joins us now with more on the financial implications of what's going on. good evening, rich. >> good evening, bret. more signals and reports pointing to weakening economic growth are weighing on markets. this afternoon the federal reserve reported economic growth earlier this summer continued to slow. investors are also concerned about the debt debate, even if
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washington raises the debt limit in the next week, analysts are questioning this country's credit rating. top agencies rate united states government debt as a aaa investment. that means they think the u.s. has an extremely strong ability to pay back lenders with interest. though with high government debt, ratings firms have warned the u.s. to cut deficits to keep its aaa rating. at a congressional hearing this morning, the agencies reviewed to endorse either of the two competing deficit-cutting proposals on capitol hill. standard & poor's president reports his company favors the democrats' plan over the republican bill inaccurate. >> we were misquoted. we do not comment on any specific plan or the political choices or policy choices being made. we are just commenting on what is a level of debt burden, level of deficit that must meet the threshold to retain the aaa. >> agency officials dodged questions of specifically how much congress would have to cut for the u.s. to keep its top
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rating. s&p only says some of the plans under discussion are credible. now if these agencies downgrade the federal government's credit rating, the u.s. will likely pay more in interest to borrow money and americans would probably have to pay more to borrow money to buy a house or a car or to go to school. bret? >> more on this with the panel as well. rich, thank you. standard & poor's today slashed greece's credit rating by two notches to the deeper end of junk status. monday moody's cut greece by three. both services say the possibility of a greek default remains high. >> in america's election headquarters tonight, a look at the frontrunner in the republican race for president. mitt romney tried and failed in 2008, losing the nomination, of course, to john mccain. correspondent steve brown reports romney has a different approach this time. >> republican presidential candidate mitt romney is running like the general election campaign has already begun. with the gauntlet of state
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nomination contests not even scheduled to start for another seven months, today in the battleground state of ohio, touring an equipment manufacturer, the gop frontrunner once again challenged president obama on the economy, jobs, and standing up to china on trade. >> and the president, when he was a candidate, said that he was going to take china to the mat. well, i'm afraid most of us thought he meant the wrestling mat, but instead he and we have been taken to the door glute new gallup polling finds american voters prefer a generic republican candidate over president obama by eight percentage points, and among declared presidential candidates, romney remains on top with 27%. only minnesota congresswoman michele bachmann is reasonably close at 18. but while the rest of the gop field scrambles through the early contest states looking for support, romney, in his second white house bid, isn't. >> he doesn't need to do that, because he can capitalize on what he's already done. this is a 50-state candidate this time, where he can go all
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over the country, raising money, building support, building his name id elsewhere. >> hey, long time no see. >> nowhere is that more evident than in iowa, despite a eager eight iowa campaign events romney has been first or second in statewide polls. by contrast, former minnesota governor tim pawlenty has done the most iowa campaigning, 80-plus events, and is not regularly broken out of single-digit percentages, but despite his support here, romney's lack of attention to iowa angers some republicans. >> he doesn't want to swept hard questions in iowa. iowa is flyover country to him. he's flowing over now, i have no time for him in the general election, i'm sorry. >> mitt romney we're told mitt romney will be in iowa enough to prove he's the best candidate to beat obama on jobs and the economy. bill burton, who heads the super pac priorities usa, points out that the business romney visited today has benefited obama's
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policies and in fact scream machines landed orders totaling a little bit better than $200,000, paid for in stimulus funds. bret? >> steve brown, live in des moines. we'll be from in two weeks. thanks, steve. we'll look at who in the media is blame looking the media -- who the media is blaming for the debt dilemma later in the grapevine, but first the heartbreaking images from somalia. we'll tell you what terrorism has to do the
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world headlines now, another one of southern afghanistan's powerbrokers was killed today by a suicide bomber. the assassination of kandahar's mayor was the third killing in the last two weeks. the taliban has claimed responsibility for all three attacks. libyan rebels received a diplomatic boost today with recognition from great britain. the conflict there in libya has gone under the public's radar recently because of more
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pressing economic concerns here in washington. but national cute correspondent jennifer griffin tells us -- national security correspondent jennifer griffin tells the nato mission is still unaccomplished. >> this is a video broadcast on libya state television tuesday of the pan am lockerbie bomber rallying support for libyan leader muammar qaddafi in downtown tripoli. the lockerbie bomber was released on compassionate grounds by a scottish judge two years ago, because he was reportedly dying of cancer. but he's still standing, as is muammar qaddafi, five months after the start of an operation the white house said would be brief. >> i said at the outset, this was going to be a matter of days and not weeks. >> it's no longer costly american tomahawk missiles being used to protect the libyans from the dictator, but the cost for the mission continues to skyrocket. the u.s. taxpayer is paying 75% of nato's operating costs. >> we know it's costing us between $2 million and
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$3 million a day now. we've probably spent over a billion dollars there, or close to it. i have no idea where the end is. >> the chairman of the joint chiefs describes the war over libya like this -- >> we are generally in a stalemate. >> since march 31st, nato has carried out more than 16,000 air sortees, and has employed 17 ships to enforce an arms embargo, hailing nearly 2,000 vessels, boarding about 200. today britain game the third nato country to recognize the libyan rebels known as the transitional national council. the u.s. and france did so two weeks ago. the pressure have also expelled qaddafi's representatives from the libyan embassy in london and requested the rebels send an ambassador. the british government also unfroze $150 million in libyan assets for use by the transitional national council. the libyan rebels have rescinded their offer for qaddafi to e.r.a. main in libya.
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two weeks ago it seemed to be an acknowledgment they didn't have the force to expel the libyan dictator. bret? >> jennifer griffin, live at the pentagon. thank you. house security chairman peter king said today that more than 40 americans have been recruited and radicalized by al-qaeda-linked terrorists in somalia and have gone there to fight. we have a report, east african terrorists are doing more than making bombs. >> there's a new weapon of mass destruction called famine. the al-qaeda-linked al-shabaab group in somalia is contributing to starvation on a mass scale. millions are hungry and risk. >> al-shabaab is the reason this is as critical as it is. >> this shows the intensifying drought, and this head area in southern somalia, that's the hardest hit. starvation and malnutrition
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levels there officially equivalent as famine. the area of somalia is controlled by the al-shabaab militia, fighting against the government. clashes are forcing refugees to walk for days to overcrowded camps, or into the hellish danger of the somalian capital of mogadishu. >> some have walked 30 days with nothing but the children on their backs. >> things are getting so dire, al-shabaab says it will finally allow in relief groups. the u.s. says it will test the pledge and send aid to somalia as long as it isn't diverted. time is of the essence. for every day that people delay getting assistance in to the somalis, they become increasingly weakened. >> it's hoped al-shabaab's stranglehold on the region could
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be loosened, but with more drought, along with a shortage of aid, eastern africa's suffering is far from over. >> the prime minister of norway vowing that last friday's twin tower attacks will not intimidate his country. a makeshift memorial to the 76 victims is growing in oslo. a sea of flowers has formed in front of the city's main cathedral. still ahead, this isn't the first time washington has been on the precipice over a debt issue, but up next a final good-bye to a very special place.
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>> russian's space agency says it will take the international space station out of orbit in 2020 and allow it to sink into the pacific ocean.
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the announcement came as a shock to government and nasa experts here in the u.s. florida senator and former astronaut bill nelson suggests russia is trying to mitigate concerns about the station becoming space junk whenever it's taken out of service. a lawsuit challenging the obama administration's funding of embryonic stem cell research has been dismissed. the plaintiffs claimed the studies violated a law prohibiting taxpayer financing for work that harms an embryo. the judge said the research itself does not destroy the embryos. the mission of putting america's war wounded back together again has been the focus of the walter reed army medical center for more than 100 years. we have more on the center's glorious past and final days. >> walter reed medical center is a window into history, a shrine to heroism and courage, a place where ordinarily people have done extraordinary things, where soldiers facing their worst nightmares received inspiration and motivation. >> i teach my kids never quit,
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just like they say. i can't sit here and quit, you know. got to drive forward. >> for 102 years walter reed has offered a helping hand, medical expertise and hope to wounded warriors. by any measure, it was always more than just a hospital. it was a family. >> that is truly what walter reed has always been about. not bricks, not mortar, not buildings, not grass, but spirit and hope and compassion. >> today paratroopers dropped in, flags were furled for the last time. >> walter reed, it is a national treasure. she's an icon of military medicine. >> the hospital was built in 1909 and named after an army physician best known for fighting tropical diseases. walter reed himself died in 1902 at the age of 51, but his leg and legacy lived on through the decades. president eisenhower was treated
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here and later died here. richard nixon was hospitalized for a bacterial infection during her presidential campaign and received high-profile visitors, including lyndon johnson. presidents have also visited to support the wounded troops, and entertainers dropped by to help the soldiers forget their troubles, at least for a few hours. in recent years the hospital became a cutting-edge facility for prosthetics for soldiers losing a limb, and also suffered a black eye in 2007 for substandard living conditions in one of the outpatient buildings. the writing was on the wall. it was decided in 2005 walter reed should close its doors. the oldest buildings on the walter reed campus will be saved as historic landmarks, while some will be shops or residences, and others turned over to the state department, but the important work of helping the veterans will go on.
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the new facility will be the walter reed national military medical center. >> the air force is trying to determine what went wrong with an unarmed intercontinental ballistic missile this morning. flight commanders destroyed the minutemen 3 icbm five minutes after takeoff over safety concerns. it was the second test problem for the missile in the last five weeks. officials in mexico say a group of the country's soldiers involuntarily crossed into the u.s. monday because there was no turnaround on the bridge. they were on a border parole when they took the bridge and had to go on american soil to get back. democrats are now ripping republicans over their choices of movies. the reviews are next "the grapevine." and who is getting the most blame for the debt ceiling standoff? we'll look at the numbers.
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>> bret: and now some fresh pickings from the political grapevine. it looks like republicans are getting a much larger share of the blame than democrats in broadcast tv reporting of the debt ceiling debate. the conservative media research center looked at stories from the morning and evening newscasts on cbs, nbc and abc, and found the gop losing the
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blame game by a 3-1 margin, 56-17. a movie clip played inside a closed-door house gop meeting tuesday meant to unite colleagues around a debt plan is being ridiculed by democrats. they point the movie titled "the town" is about bank robbers. here's the clip. >> i need your clip. you can ask me about it later. i'm going to hurt some people. >> who's car we going to take? >> the democratic national committee called it's a sad metaphor for gop policies, but assistant minority leader james clay burn noted democrats have used films in the past to fire up members. he said years ago the bloody drama "brave heart" was played to illustrate teamwork and unity, not "going out and hurting anybody." finally a group of carefullians is starting to collect signatures for a ballot
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referendum to overturn the first in the nation law requiring gay history be taught in public schools. backers need to get just over a half million signatures by october. california governor jerry brown signed the bill into law earlier this month. this is a fox news alert. just moments ago, all 53 senate democrats have written a letter to house speaker john boehner to tell him his revised plan to extend the debt limit will not pass the senate. meanwhile the speaker's staff is saying that the congressional budget office analysis of the new bill indicates its spending cuts are greater than the proposed debt hike. all the debt ceiling talk is new to many americans, but chief washington correspondent james rosen tells us this kind of battle has been fought before. >> the democratic treasury secretary warning that the gop-led congress was on the brink of the unthinkable. republican lawmakers accused the white house of employing scare tactics and argued outstanding debt could easily be paid using
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existing tax revenues. these are not headlines burglared out 11 1/2 seconds ago via twitter, but the ancient sounds of a distant and eerily beltway battle waged back in 1995. before that debate was over the federal government had been shut down twice, as the as a result of a wholly separate tussle over appropriations, but by march congress had approved a $471 billion increase to the nation's $5 trillion debt ceiling. the vote was 328-91 in the house, and the increase passed by unanimous consent in the senate. >> the big difference is we have a much, much more ideological and left wing liberal president now than we had in bill clinton who was much more practical about this. president clinton acknowledged and accepted the proposition that we ought to get on a path to a balanced budget. >> liberals with long memories cite the degree to which the house speaker, newt gingrich then, john boehner today, exercised control over their own
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caucuses. scot lilly, now a senior fellow at the center for american progress, argues gingrich could more easily forge a deal because gingrich was more involved than boehner in recruiting the freshmen. >> he was timetable bring them along. he was part of their revolution in a way. speaker boehner is seen, i think, within the conference as a more moderate voice. i think he's not as trusted by the conservative elements within his -- within the republican conference. >> analysts also cited the rise of the internet, which serves some say to inflame opinion on both sides and make compromise more difficult, and the economy. the unemployment rate in 1995 was a little over 5.5%. in washington, james rosen, fox news. >> president obama will announce new fuel economy standards friday. the associated press reports the new target for cars and light trucks will be 54 1/2 miles per gallon by 2025.
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that is down from the administration's initial proposal of 56.2. the debt clock continues to tick down. now under a week. we'll get reaction from the fox all-stars of the breaking news all-stars of the breaking news when we come back.
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i got an egg [pop] i got gum i got a hair net a kazoo a candy necklace an orange a band-aid for forty cents, i got one of these [pop] i got a really great hat i got half a song extra mayonnaise a stamp helium some bling some fries balloon dog fabric softener this much of a shirley temple i got a mustache an apple sprinkles fifteen minutes of parking and a ticket [pop] lipstick two pills a day is what it takes to stay alive
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if you're hiv positive. those pills cost about forty cents a day. lunch bag [pop]
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>> it appears quite clear that boehner was -- a favor was done by cbo for him yesterday, because his pool was doomed to favor. >> the speaker's plan is on life support, and it's time for him to pull the plug. we need to move on to other plans that actually have a chance of passing. >> you guys say i'm a pretty hard-line conservative. as i said, i'm going to support this. i've talked to many people about this. i stand by the decision. >> i am going to vote yes for this. i truly believe this answers a lot of the questions that we need. it cuts spending. i think it's a way forward. >> bret: there you see some of the back and forth today, this as the congressional budget office has just put out a new
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analysis of the new house speaker boehner plan. here it is really quickly. in bullet points, cut and cap spending by $917 billion over 10 years versus the $900 billion hike in the debt ceiling. cut $22 billion in fiscal year 2012. and then hold spending to fy-2010 levels until at least 2016. this is down in the weeds here, reduce discretionary spending each year by these amounts, and require congress to draft proposals of reductions of $1.8 trillion. that was in the first plan. now, we'll get into some of the specifics here, but just moments ago 53 senate democrats sent out a letter to speaker boehner saying, among other things, this "we need to work together to ensure that our nation does not default on our obligations for the first time in our history. we heard that in your caucus you said the senate will support your bill. we are writing to tell you that we will not support it." that was clear perhaps by nor reid and senator schumer's
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comments today. let's bring in our panel to analysis. david drucker, nina easton, and charles krauthammer. let's start with the revised boehner plan that appears to be get tea party support. it seems they're trying to dig out some more spending cuts. >> yeah. this was the problem yesterday with that. aside from the debt ceiling, what you had for fiscal year 2012, which starts in october, was spending cuts in single digits. a lot of people made some mention yesterday, well, it only cuts the deficit by a billion in the first year, but the real number you need for these guys to be able to believe in this and sell it, how much money is it going to cut immediately? because for years republicans feel as though they were hoodwinked with promised back-loaded cuts. lo and behold you get to a new congress and nobody cuts spending. >> explain the difference between the baseline, where you start this thing, you start in
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january or start in march. >> this is what makes it confusing. they were doing two different baselines yesterday. one started in january. in other words, how much are we spending beginning in january, so how much is the spending cut worth versus march, after we averted that government shutdown, we were ael here late. they cut some spending, and so when you went with the march baseline, you found that the boehner plan cut a lot less in spending in fiscal 2012 -- >> as did the reid plan. >> it can't get out of the senate, because you can't get any republican right now to support it. and so what boehner went back and did -- and i think this actually might lend some credibility to his plan that he was willing to revise it, is he front-loaded some more of the cuts, he made sure that the debt ceiling hike was lower than the amount of spending would be cut. now, if he could actually get this thing done, the big test be, would that commission, that committee of congressmen, actually be able to cut entitlements, all of that, because that will send his base in another uproar if they can't
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get it done. something he's promised in the future. that's what's next. >> although, nina, when you hear allen west and kristi noem coming out of these meetings behind closed doors, embracing it, seems like they're whipping republicans pretty well. >> there was a sea change from yesterday. that's the political impact of the numbers david's talking about. he had an incrippent rebelien on his hands. harry reid and the senate democrats were counting on that. boehner to his credit kept his ranks in line, and most of them actually rallied around him today. that was a big -- that was a big moment for him. i think right now we're at a point much like we were with -- before the government -- almost government shutdown a few months ago, where you have boehner and harry reid, who is a deal-maker, don't forget, and reid actually, despite that shot across the bow today by the 53 senators, harry reid is a deal-maker. he doesn't have taxes in that
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plan that he has. they both -- both those figures emerged pre-- you know, during the budget battle that led to the -- that forestalled the government shutdown. they emerged as the major figures there. i think that's what we'll see. we'll see those two emerge, a deal eventually go to the white house. if this white house really thinks this is a catastrophe waiting to happen, it's going to have to deal with it. >> bret: charles, they may say in this letter that this deal won't pass the senate, but you have a number of democrats who are up for re-election from red-leaning states, who would have to vote on the boehner plan, that by numbers is not that different from the reid plan. there are a few differences. >> i see this letter and the threats coming from schumer and from reid as a bravado. they're really worried. they were hoping yesterday that the republicans in the house would implode, they would be suicidal, kill the boehner idea, the boehner plan, and be left
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with no initiative, and be the ones who would take the blame. instead it looks as if there's every indication now that the house republicans are going to get together on this, they'll squeak by, get the required majority and pass the boehner plan. that will put the spotlight on the democrats in the senate. then they're now on the defensive, if that happens. the republicans will seize the initiative. the blame is now shifting entirely on to the democrats. they are trying to scare the republicans away with a letter saying, dead on arrival. well, it's not going to be dead on arrival. what reid will have to do is to add a curly cue or two, some kind of amendment, something on it so he can at least say it's an amalgam, it's a compromise between the reid plan and the boehner plan, which would allow the democrats you were talking about, the ones who will be up for re-election next year, and the president, who has issued what i think is a phony veto
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threat, i'm sure that if it reaches him, there's no way he'll be able to actually do that. so that will be the protection. the president will say, well, there was a carjackers it wasn't wasn't -- there was a compromise, it wasn't the boehner plan, therefore i can sign it. >> we're getting word from the hill that the rules committee will meet tonight at 7:30 to prep this bill for a vote tomorrow. it's possible, they're still counting heads, likely to do a vote after the markets close, one would think, because they don't want to see something go down as we saw in tarp. >> correct. >> bret: but that happens, if they get it through, the onus goes to the nat democrats. what -- senate democrats. we're looking at saturday, sunday. we're looking at monday. >> if this thing ends up in the senate, i would expect that it be filibustered by the democrats. you need 13 democrats to get to 60 votes, to break the filibuster, figuring you have all 47 republicans. i agree with charles.
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harry reid at heart is a deal-maker. by the way, very talented at putting together pieces of a legislative puzzle. and i think that they would find some way to try and make this both palatable to enough of his members so that it could then go back to the house and still pass. and i would say that if reid is able to do that in a way that works, he can probably get democratic votes in the house. i agree, the president is not going to hit anything that hits his desk between now and august 2nd, 3rd and 4th, no matter what they tell you. >> bret: the prospect for the huge $4 trillion deal, they're -- >> the big question still is to be decided is not these questions of cuts. it's also the short term/long-term issue, which raises political issues. do we do all this after the election -- or before the election, after the election. huge political implications on this.
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those are big decisions that have to be decided by reid and calculations that he's going to have to be making in the next couple days. >> bret: next up, more on the economy and the debt after this break.
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>> do you honestly believe that the united states could default on its debt? >> if we change the rating, it means that the risk levels have gone up. didn't mean it's going to default. >> bret: the hearing up on capitol hill today with the ratings agencies not answering a lot of questions from council congressmen about what exactly they need to do to avoid a downgrade, but as far as default, they essentially said they don't think that a default will happen. all the back-and-forth with the debt caused the market to take a big dive today, as you take a
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look at the dow. 199 down, s&p down almost -- well, down 27. nasdaq down 75. we're back with the panel. nina, the implications for the economy, in all of this, what's your sense? >> well, let's start with the problem, the economy is fragile right now. slow growth, high unemployment, extremely high long-term unemployment. you throw into the mix the possibility -- and real possibility that our debt -- we'll be downgraded from a aaa to a aa. >> even if -- >> even if. there's two reasons for that. one is the markets -- or the rating agencies, who, by the way, were culprits in the financiafinancial crisis, they t feel enough wasn't done to deal with the long-term debt. secondly, if you don't do all the cuts now, you're going to go through this all again, we'll
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have this uncertainty again in six months, markets don't like uncertainty. businesses don't liken certainty. we're already seeing that in the economy, where businesses haven't liked the uncertainty that's been thrown out by this white house on everything from taxes to regulation. this adds more uncertainty. it puts pressure on interest rates. it puts pressure on the dollar. on interest rates, by the way, it could mean as much as another $100 billion that the u.s. has to spend in interest. >interest. >> bret: if the downgrade happens? >> to a aa. it's not a crisis, but it's not good in this fragile economy. >> bret: this week we'll get more numbers about the economy, and they're not predicted to be good. they've been bad on housing, on pretty much everything, david. in this environment, does that put pressure on one party over the other about this rating, about the downgrade? >> it was interesting today, because everybody was fighting about whose side the rating
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agencies were on. the cut, cap and balance said our plan is the only that will keep the rating. the president says we're the only ones that can do. harry reid says, we're the only ones. the danger politically, nobody knows where the pressure will be distributed. right now the president owns the economy, but if we get downgraded -- let's say it affected consumer borrowing rates, whether they're mortgage rates, you know, car loan rates, credit card rates, maybe your local or state government now has to pay more for government bonds when they want to borrow money, people are going to be upset. you don't know for sure where they're going to place the blame, because they don't like anybody right now. the one thing, i think, republicans have going for them in the short term is they have leverage to get what they want before august 2nd. if we blow past the deadline, we get downgraded, and everything falls apart, and the economy reacts negatively, then at some point people might just start to
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say, you know what, it's not just the president's fault, it's all of your fault, and it actually makes compromise harder, because then everybody thinks they're winning, even if everybody's losing. >> yeah. if the markets really tank, a lot of people will be running for the hills on this -- >> if it does, it will be because the ratings agencies and the markets have seen no desire in this country, particularly among democrats, to make real changes, real cuts, entitlement cuts, that everybody understands is a source of the deficit. this argument that the ratings agencies will lower our ratings because of the extension of the debt extension, the boehner plan is not long enough is a phony. it's nice to see -- it's touching to see the democrats have all of a sudden become attached to the idea of certainty after injecting uncertainty on taxes, healthcare, regulation into our economy, month after month, for
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2 1/2 years. all of a sudden you have to have certainty. in the letter the senate democrats just issued, they warn there will be a ratings agency downgrade if there is a short-term extension. six months is the historic average, the average in the reagan years, which obama cited as a paragon of being serious about debt in the past. the reason the ratings will drop -- and i think it will within a year, if not less -- is because one of the two major parties in every argument, every negotiation, every plan that's offered, has been looking for loopholes as a way to appear to cut spending when it doesn't. the worst example is the reid plan, which has a trillion dollars of cuts for 10-year extension of the surge in iraq and afghanistan, of phony cut from a phony spending idea, and that's, i think, the reason why nobody has confidence. it can't happen if one of the two parties is clearly unserious
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about debt reduction. >> bret: 10 seconds, nina. more on the online show, but go ahead. >> i was just going to disagree with charles. the concern about the uncertainty is coming from people on wall street, not just democrats. that's not just hyped by democrats. >> bret: all right. we'll continue this conversation on the online show just after this program. that's it for the
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>> bret: finally tonight it's rare that two big stories intercept. david wu known for antics decided to resign because of this picture. he will not be leaving town quietly. >> because neither party is blameless for the decisions that led to this problem, both parties have a responsibility -- >> [ laughter ] >> over the last several months, that's what we have been trying to do. i